Biosimilar Formulary Evaluation: A Pharmacist’s Guide

Junyu “Matt” Zhang, PharmD BCPS
Clinical Specialist Pharmacist
Community Healthcare System–Community Hospital
Munster, IN

The growing market of biosimilars presents an increasing need for guidance and oversight regarding their role for insurers, hospital facilities, and patients. Biologic drugs or biological therapy, by definition, consists of large molecules such as enzymes or proteins derived from living organisms.1 Because of higher manufacturing development costs and the complexities of working with these large molecules, biological drug spending continues to be a primary driver of increases in healthcare costs. Biosimilars were developed through an abbreviated approval pathway under the Biologics Price Competition and Innovation Act of 2009 as a way to help lower overall healthcare spending and improve patients’ access to them. According to the U.S. Food and Drug Administration (FDA), a biosimilar must show no clinically meaningful differences in purity, safety, or efficacy from an original reference biological drug in clinical studies. To date, 12 biosimilars have been approved in the United States (Table 1-see PDF),2 but their adoption into the market raises questions regarding safety, interchangeability, and cost.1 This article addresses some common concerns regarding biosimilars and provides practical guidance for implementing their use in a healthcare setting.

The first biosimilar product approved in the United States was Zarxio in 2015.2 Prior to its approval, questions regarding the immunogenicity of biologic drugs were raised by European Union (EU) authorities because of an incidence of pure red cell aplasia (PRCA) related to use of a marketed biologic, erythropoietin.3 This was found to be related to a changed formulation in the biological product and raised concerns about an increased risk of adverse immunogenic effects. Multiple published studies have subsequently evaluated switching between reference biologics and biosimilars and have found no reported increases in treatment-related safety events or efficacy differences. However, postmarketing pharmacovigilance of biosimilars is still recommended, along with good manufacturing practices, to ensure the quality of the products.

Regulatory issues, such as biosimilar interchangeability or the ability of the pharmacist to substitute a reference product for an approved biosimilar without contacting the ordering prescriber, are often discussed. Unlike generic small chemical molecules, for which substitution may be allowed based on the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (“Orange Book”), only biosimilars with interchangeable status may be substituted without alerting the provider.4 Currently, no biosimilars have that status. The FDA has deferred to various state laws regarding biosimilar substitution requirements. These laws may vary in their requirements regarding record keeping and processes for notifying or communicating with the physician or patient. Therefore, reviewing one’s own state law regarding biosimilar substitution is advised.

The presumed lower cost for biosimilars has been a large selling point in their approval and acceptance among healthcare lawmakers and insurers.1 However, cost saving for hospitals is often complicated by various payment models, reimbursement schemes, and regulatory uncertainties. Currently, the potential price reduction associated with biosimilars ranges from 10% to 30% and is based on projected cost-savings models from small chemical molecule markets. It is unclear whether the lower price for biosimilars will translate into actual cost savings for the patient because of specialty tiering, directed by pharmacy benefit managers, which could increase patients’ coinsurance rates. Additionally, each biosimilar market is characterized by great heterogeneity because the availability of competing products can affect wholesale price. For example, in a larger market, such as granulocyte colony-stimulating factors, 14 products have been approved, including 3 biosimilar products, which will compete with one another as price and contracts are being determined. An insurer like Medicare has a great incentive to cover biosimilars because of lower prices, but actual savings for hospitals or patients may be less because of differences in inpatient versus outpatient reimbursement schemes.

Given the growing popularity of biosimilars and the unanswered questions about them, hospital facility staffs should consider taking several practical steps before making additions or substitutions to the formulary. First, a drug utilization review of the current formulary biological drugs used in the inpatient and outpatient settings should be compared with the available FDA-approved biosimilar agents to assess for potential cost savings. The main focus of the review will consist of an abridged cost minimization analysis (Table 2-see PDF) that, assuming equal safety and efficacy, solely compares costs between the two products.5,6 Drugs used primarily in the inpatient setting are typically reimbursed through diagnosis-related groups’ bundled payments; and generally, the least costly option is preferred. In the outpatient setting, the analysis should include a breakdown of payer mixes (e.g., Medicare versus private insurers), along with special pricing considerations for 340b-eligible institutions. Note that for a 340b-eligible institution, hospital outpatient prospective payment system (OPPS) changes have been proposed by Medicare for 2019, which reduces part B reimbursement from average sales price (ASP) + 6% to ASP – 22.5%.7 This change will exempt rural sole community hospitals, children’s hospitals, prospective payment system-exempt cancer hospitals, and medications with designated pass-through status. Pass-through status is granted to innovative biologics, including biosimilars, for 2–3 years, which might incentivize early adoption of biosimilars on hospital outpatient formularies.

Additional considerations for the addition of biosimilars in outpatient settings include individual state regulations and potential reimbursement differences between payers.2 States have different requirements for prescriber notification, patient notification, and pharmacy record retention. Workflow adjustments and early discussion with providers will be key to ensuring a smooth transition. Additionally, each hospital facility should evaluate the contract with its manufacturer or wholesaler group purchasing organization to determine eligibility for biosimilar interchanges without incurring any negative reimbursement consequences. Although Medicare has changed some of its reimbursement schemes for biosimilars in order to avoid financial incentives for higher cost medication, utilization, average sales prices, and percent reimbursed from private and government insurances should still be reviewed.

Following the addition of a biosimilar to the formulary, the efficacy and safety of biosimilar agents and their reference biologics, including signs of adverse immunogenic effects and any changes in manufacturers’ product formulations, should continue to be monitored.3,4 This safety review should include electronic alerts linking biological reference agents with their biosimilar product if patients have developed severe allergic reactions to either agent in the past.

The creation of a biosimilar policy, outlining the process for review, addition, and monitoring of biosimilar agents, will be useful in bringing healthcare providers more awareness of these agents and comfort with their use and will furthermore ensure smooth transition of their use in the outpatient setting. As more biosimilars arrive on the market, it could become cumbersome to review every product when its addition to the formulary is being considered. Therefore, it would be prudent to allow for an automatic substitution of biosimilar products with the reference product in the inpatient setting without needing the formal approval of the pharmacy and therapeutics committee. Additionally, outlining the steps based on individual state regulations for interchanging biosimilar products on the outpatient side should be well defined in the policy to maintain consistency and ensure compliance with legal requirements.

The biosimilar and biologic market is rapidly growing, and pharmacists serve as valuable resources in educating providers and patients about the safety, efficacy, and regulations pertaining to biosimilars. In addition, potential cost-saving opportunities in both inpatient and outpatient settings should be evaluated, taking into account the various regulatory requirements. Active pharmacovigilance with biosimilars should still be practiced, as with any biological product.


  1. Mulcahy AW, Predmore Z, Mattke S. The cost savings potential of biosimilar drugs in the United States. The RAND Corporation. 2014. Available at Accessed September 22, 2018.
  2. U.S. Food and Drug Administration. Biosimilar product information. Available at Accessed September 28, 2018.
  3. Cohen HP, Blauvelt A, Rifkin RM, et al. Switching reference medicines to biosimilars: A systematic literature review of clinical outcomes. Drugs. 2018;78(4):463-478.
  4. U.S. Food and Drug Administration. Purple book: Lists of licensed biological products with reference product exclusivity and biosimilarity or interchangeability evaluations. Available at Accessed September 28, 2018.
  5. Simoens S, Jacobs I, Popovian R, et al. Assessing the value of biosimilars: A review of the role of budget impact analysis. PharmacoEconomics. 2017;35(10):1047-1062.
  6. Elseviers M, Wettermark B, Almarsdóttir, AB, et al. Drug utilization research: Methods and applications. Oxford, UK: John Wiley and Sons, Ltd.; 2016.
  7. Centers for Medicare and Medicaid Services. July 25, 2018. CMS proposes Medicare hospital outpatient prospective payment system and ambulatory surgical center payment system changes for 2019 (CMS-1695-P). Available at surgical-center . Accessed October 7, 2018.